San Jose’s big El Paseo de Saratoga mall is bought by busy developer

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El Paseo de Saratoga retail complex in southwest San Jose, elevated view.
One of San Jose’s most prominent retail malls, El Paseo de Saratoga, has
been bought by a venture headed by busy Bay Area developer Peter Pau, in a
major property deal to kick off 2019.
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AMC Saratoga 14 theaters in San Jose. One of San Jose’s most prominent
retail malls, El Paseo de Saratoga, has been bought by a venture headed by
busy Bay Area developer Peter Pau, in a major property deal to kick off
2019.
George Avalos / Bay Area News Group

TruFusion yoga and pilates has an opening soon sign displayed at El Paseo
de Saratoga in San Jose. One of San Jose’s most prominent retail malls, El
Paseo de Saratoga, has been bought by a venture headed by busy Bay Area
developer Peter Pau, in a major property deal to kick off 2019.
George Avalos / Bay Area News Group

Burgerim Gourmet Burgers opening soon sign in San Jose at El Paseo de Saratoga. One
of San Jose’s most prominent retail malls, El Paseo de Saratoga, has been
bought by a venture headed by busy Bay Area developer Peter Pau, in a major
property deal to kick off 2019.
George Avalos / Bay Area News Group

SAN JOSE — One of San Jose’s most prominent retail malls, El Paseo de Saratoga, has been bought by a venture headed by busy Bay Area developer Peter Pau, in a major property deal to kick off 2019. The shopping center, which despite its moniker is located in southwest San Jose, is anchored by big-time […]

SAN JOSE — One of San Jose’s most prominent retail malls, El Paseo de Saratoga, has been bought by a venture headed by busy Bay Area developer Peter Pau, in a major property deal to kick off 2019.

The shopping center, which despite its moniker is located in southwest San Jose, is anchored by big-time names such as the AMC Saratoga 14 theaters, supermarket giant Lucky and sporting goods and outdoor gear giant REI. Smaller merchants include Peet’s Coffee, Jamba Juice, Ulta Beauty and Red Robin restaurant.

“This is a long-term investment,” said Matt Larson, a spokesman for Palo Alto-based Sand Hill Property, a development company headed by Pau. “The shopping center is aging and needs some improvements.”

Sand Hill Property paid $146.6 million for El Paseo de Saratoga, according to Santa Clara County documents and city taxes reported on the property deed.

A survey of the mall by this news organization showed that while Thomasville furniture has closed its doors, other retailers have signs that signal they are about to launch outlets at the center.

Located at West Campbell and Saratoga avenues, El Paseo de Saratoga totals roughly 300,000 square feet.

“It’s a pretty successful center,” said David Taxin, a principal executive with Meacham Oppenheimer, a commercial realty brokerage that specializes in retail and restaurant properties. “It’s a safe, long-term investment.”

The merchant mix at the center bodes well for the complex, Taxin said.

“Movie theaters are very good for shopping centers and so are grocery stores,” Taxin said. “Plus you have some good food choices and the Ulta beauty store.”

The current assessed value for the center is $120.5 million. The seller was Terramar Retail Centers.

Sand Hill Property agreed through the transaction to assume an existing mortgage on the property from Metropolitan Life Insurance that at the end of December had a principal balance of $58 million.

“We will look to continuously upgrade the physical plant and introduce new tenant mix over time,” Larson of Sand Hill said.

It’s also possible that El Paseo de Saratoga could be tinkered with in a significant way by Pau. Pau has orchestrated a years-long quest to replace Cupertino’s moribund Vallco Mall, which is expected to yield to a game-changing development of 2,400 homes, 1.8 million square feet of offices, 400,000 square feet of retail and a 30-acre rooftop park.

“Peter Pau always thinks big,” said Bob Staedler, principal executive with San Jose-based Silicon Valley Synergy, a land use and planning consultancy. “You could create an urban village” at El Paseo de Saratoga.

San Jose officials could be reluctant to diminish retail spaces that generate plenty of tax revenue for the cash-starved city. However, plenty of development models exist that could add residences without the loss of retail buildings.

“You could put residences on top of some of the retail buildings,” Staedler said. “If Peter Pau maintains the retail and puts housing on top that’s something the city might view favorably for an urban village concept. People could live there and have a lot of amenities on site.”